Buy Gold

President Obama has appointed Janet Yellen, President of the San Francisco Federal Reserve Bank, as Vice-Chairman of the Federal Reserve. Reuters reads the tea leaves:

Yellen would replace Donald Kohn, a 40-year veteran of the Fed who announced earlier this month that he would retire on June 23. …
She is considered one of the most “dovish” members of the central bank’s policymakers, meaning she is seen to lean toward policies that will boost growth and promote employment rather than those aimed at keeping inflation at bay. …
A top-flight economist, she has warned of “undesirably low” inflation and the prospect of a prolonged, sluggish recovery for the U.S. economy.
“Even with my moderate growth forecast, the economy will be operating well below its potential for several years,” Yellen said on February 22. “If it were possible to take interest rates into negative territory I would be voting for that.”
Policymakers are currently split among those who think persistently high unemployment calls for a prolonged period of easy money and those who worry that Fed’s massive cash infusion into the financial system poses a dangerous inflation risk if the Fed does not soon begin to pull back reserves.

This seems like a clue as to where the Obama administration intends to take the economy. If I’m not mistaken, Jimmy Carter did much the same thing: juice the currency, try to stimulate growth and worry about the inevitable inflation later. The problem, of course, is that the federal government’s policies are doing just about everything possible to suppress economic growth. Nothing the Fed can do will make up for an anti-growth, anti-business administration. But it can create inflation, and here’s betting it will. The moral of the story is, look for the dollar to decline sharply. Buy gold.
UPDATE: Larry Kudlow agrees.